We were looking to invest in Estonia (and elsewhere in Eastern Europe), but found a lot of people with eager school-boy's mentality and no experience. Despite the hype, Estonia did not add up to what it promises. The more serious tech magazines and blogs have not recommended Estonia for a good reason.

We decided to invested in Finland instead. The country has good international connections and a long tradition of professionalism, both in the private and state sector. Finns are on the rise again after Nokia and deliver what they promise, plus more. And if you have to spend long periods of time in Finland, it has top living standards.

Estonia is tiny and poor. With startups you have to grow, get investments, international recognition, etc. This is not possible in Estonia, so you may as well go where the opportunities are bigger from day one. No one wants to be a guinea pig.

Tiny and poor? Tiny I will grant you, but poor, absolutely not. Estonia is a developed country with an advanced, high-income economy with the highest gross domestic product per person among the former Soviet republics. It is also a member of the Organisation for Economic Co-operation and Development. Moreover with a rank of 33 within the Human Development Index, Estonia receives a ranking of Very High Development. I suspect you have never been to Estonia like I have to see first-hand whether it is rich or poor and I also suspect that every Estonian must be driving a Lexus and using a platinum-shelled iPhone just like you in order to not be considered poor.

Your article “How did Estonia become a leader in technology?” comprehensively explains Estonia’s success in innovation. But in looking ahead it only mentions ProgeTiiger and does not explain the nature of its innovation model. In this respect I would like to mention at least two other new initiatives essential for Estonia’s emerging market innovation model: Prototron and Mektory.

The Prototron Fund is a new facility to fund prototypes. It is a “proof of concept” fund, which addresses the - for emerging markets essential - element of the affordability of conducting innovation. The cornerstone for adaptive and incremental innovation is the accelerating of technology diffusion. In this respect Estonia sees two new initiatives: Mektory in Tallinn and Ideelabor in Tartu. Mektory is the most far-reaching novelty in the application of the model of incremental and adaptive innovation. Mektory is an interdisciplinary intellectual and tangible innovation center that actively engages companies, entrepreneurs, students, and faculty in project implementation.

• Mektory raises awareness of existing knowledge through expertise in business modeling, mobile services and media and design and product development.
• Mektory makes complementary assets available by involving representatives of companies and companies’ R&D employees, by making available supervisors from the Tallinn University of Technology, and by recruiting students as project team members.
• Mektory improves the accessibility to advanced technology and markets, by directly engaging Multi National Companies, like Mitsubishi, Ericsson, ABB, Samsung, Abeking & Rasmussen and Electrolux.
• Mektory improves the affordability of conducting innovation by organizing a business model competition and sponsorship of companies, where the winner gets a field trip to Silicon Valley to engage in a start-up community and learn how to build and promote their company.
• Mektory accelerates of technology diffusion by internationalization to internalize competences and showcasing high-tech business developments.

The commercialization of University IPR at the Tallinn University is boosted by these initiatives. In the summer of 2013 the Prototron got directly involved in funding prototypes based on university patents, and Mektory will fully open its doors in November 2013, when its Living Lab facilities will be ready and available.

give this person a break - it's not his native language. and considering that you don't speak a lick of estonian, let alone know where it is on a map, keep comments, where you attempt to assert your superiority/authority but end up looking like an ignoramus, to a minimum.

The article does not spell contribution of Estonians rather it only states automation and computerization of all activities. Where did they get money from? How did they earn? which field they contributed/developed in?

I was involved with the privatisation of Eesti Telekom, and that was a point that our Estonian counterparts made frequently. Because of its traditionally strong German-based education system, Estonia was singled out as the Comecon 'centre of excellence' for IT, electronics and - particularly - control systems.

This served the country in very good stead when they were faced with building communications infrastructure from virtually nothing [I recall standing in Tallinn's Town Square in 1991-2, listening to the soft clicking of Strowger machines coming from the basement of the central telephone exchange].

From that, they were able to develop mobile telecoms as their post popular platform, completely bypassing the whole analogue-crossbar-digital process. With so many skilled and educated specialists, they were able to outpace any comparable ex-Soviet country.

This article contains too many mistakes to be objective.
Skype was, at best, a hybrid company (Danish-Swedish-Estonian), not Estonian. The founders were a Dane and a Swede. The money and connections came from these two. Estonians, among other nationalities, were a hired staff. Similarly, Apple is not an Chinese company, despite the factories and machinery staff in China.
Hotmail has no connection to Estonia.
Transferwise is an UK company. They received some money from the Estonian government, but were never based in Estonia. Ditto Realeyes. The Estonian government, led by the president Toomas Hendrik Ilves, is only too happy to give money to anyone with an Estonian passport or background. It is worth mentioning that there are many well-established companies already doing successfully what Transferwise is attempting to do. Transferwise rates are slightly higher than their competitors and they only have a few currencies available.
By far not all Estonian schools were online by 1998. This is government propaganda. Many didn't and still don't have money for toilet paper, let alone a computer.
There is a huge problem with start-ups in Estonia. The majority of people have no experience whatsoever. Most business plans are, at best, ridiculously naive. The government is giving out grants without any meaningful insight which business plans may work and which will not. What The Economist does not tell their readers is that the majority of start-ups fail and the few that succeed emigrate from Estonia to Asia, the UK and the States. On balance Estonia does not benefit greatly from start-ups, start-ups do not create many (long-term) jobs nor generate enough taxes for the funding to be justified.
There is an interesting blog worth reading by start-up insiders about the bubble in Estonia: doteebubble.blogspot.com (I have no connection to the blog).
And lastly, Estonia is one of the poorest countries in Europe. The government received a record number of food aid from the EU this year. More than 10% of the population is starving: http://news.err.ee/society/ca3fb7a2-4998-4729-b508-3f5eed2bcecf . The corruption is rife. In June the media reported that the ruling Reform party has been busy buying votes. So much for the e-government and transparency. If Estonia is so successful, well-connected and rich, why are Estonians leaving the country in huge numbers: http://www.forbes.com/sites/markadomanis/2013/07/13/estonia-and-the-depa... ?

Skype's majority shareholders were Swedes, the core tech team in Estonia held shares as well. Skype is a Luxembourg company, this is where it's HQ is registered. Skype was made in Estonia. If you want to draw parallels with Apple, Estonia is where the design and development took place. All these statements are correct. I don't really see what's your argument here.

TransferWise founders are Estionians (this very same argument earlier seemed to place Skypes) and administration is based in Estonia. Headquaters are registered in the UK. Technical development runs elsewhere in Europpe. The've taken investmentw from global investment groups. Again all these statements are correct and I fail to see what you are arguing against.

Skype was sold to Ebay for $2.6B in 2005. Ebay later sold it to an investor group Silver Lake Partners in 2009(at a $1.2B loss), who turned around and sold it to Microsoft for $8.5B just 2 years later, which was an insane valuation. Only a fool with too much money to throw around like Steve Ballmer would throw that kind of money at a company like Skype. $8.5B for a company that essentially was operating at a loss and had a long term debt of $686m. Comparatively Microsoft has a market cap of $265B on earnings of $21B, a PE ratio of 12. Microsoft already had Windows Live Messenger with 10x more users than Skype, it did not need to spend another $7B for slightly better technology. It is sitting on far too much cash and should give that back to the shareholders as dividends rather than flittering it away on stupid outrageous acquisitions like these to soothe Ballmer's ego. Much of that $8.5B went to Silver Lake Partners who made out like bandits. Let's just hope Skype doesn't turn into another complete write off like aQuantive, $6.5B!

Hotmail was invented by American Jack Smith and his Indian-American co-worker at Apple, Sabeer Bhatia in 1995. Smith, who was born in the Bay Area and grew up in Oregon, was the one who came up with the idea of anonymous internet mail and built much of the architecture. Sabeer Bathia was born in India, transferred to Caltech as an undergrad and got his master's from Stanford. Hotmail was sold to Microsoft in 1998 for $400m, both worked at Microsoft for a time before moving on to start up other companies in the US. Not sure what Hotmail has to do with Estonia. It was definitely not invented there.

It's great that Estonia is taking full advantage of its small size and completely automate its healthcare, tax filing and voting. Only a country of 1.5m could pull this off, though I'm sure it was still no small task.

I don't know how you could teach 5 year olds how to code. Computer coding requires lots of logic and math skills. However this does speak to the importance of teaching web programming as a basic skill. The US is still so far behind in this regard. We need to start teaching web coding to high school students as a requisite course alongside English and Math.

I think there's a mistake. First graders are learning coding, but in Estonia, first-graders are 7, not 5 as in the UK. 7-year-olds can learn basic maths, so they can certainly grasp the basics of coding.

As always, the Economist only looks at the elite. There's no room for the concerns of the very poor, or even the lower middle class.
Two really big problems, a flat tax and electronic voting are brushed off. A flat tax is a perverse transfer of wealth, from poor to rich. That is NEVER a good idea, except for the rich.
And electronic voting in a country full of would-be hackers, sorry I mean, tech-savvy young people, is a REALLY bad idea. Look at Diebold and Ohio, where the election in 2004 was almost surely stolen. Yes, perfect crime does exist, when the crime partners have a strong interest to keep out of jail.

It's about 591 times harder to cheat with paper ballots than that it is with e-voting. Difference is, e-voting can a few VERY rich people even MORE money, so they're gonna "wield their considerable power" to make sure that councils and states buy their e-voting. And yes, in plain English, that means BRIBING senators, mayors and governors. With Citizens United, the USA has now fully legalized bribing by perversely calling it "free speech".
Yah.

"Lock them all up in jail without due process" would also be classified as free speech by these jokers.

As always, US free speech means the freedom to make others LESS free. That same mentality has now arrived in Estonia.

If all was so rosy there, how come young Estonians are leaving like crazy for Germany?

The poor people does not need to tax everybody else to live with basic government housing and fed, yet 11% of US budget is dedicated to welfare (I am sure the receiving population "poor" does not add up to 11%), and military spending is 23%. Yet only 3% is dedicated to educate 99% of the population. It does not take much to guess where the extra taxes went.

And a good understanding of Internet and security may help you from that laughable conclusion of "591 times harder to cheat with paper ballets". Let's just talk about 2004 election, anywhere else you can think of as "questionable" voting? Oh you can only take one "possible" example for e-voting, but none other? Read further please instead of being ignorant:

Re: Flat tax. It's the perception of fairness that matters. Poor people are inclined to like it because they are more confident that the rich are actually paying SOMETHING. There's something to be said for that - and for the freedom that comes from being rid of a system that sucks up vast amounts of resources, brain power, and time, doing battle with the Godzilla tax system. Of course, all that activity shows up on the GDP books in the plus column; but what was actually produced?

I'm surprised that the Economist, a respected publication, would publish such a superficial - nay, propagandist - article. While Estonians have remarkable achievements to point out since independence was restored, the technological advances that the article praises without deeper analysis do not contribute much to the quality of life for us. Some, such as e-voting, have contributed toward corruption.

I congratulate Estonia for this. However I felt so sad when read this article because I wished we had qualified ministers in Iraq to build the country. Unfortunately we never seen any progress in any field of development

So, ten programmers from Skype (which was made by two guys from Sweden, as I remember, and those guys made the most money) jump-started a start-up scene in Estonia? Where are all the other successful startups?

This article should be read above all in India. Should Mr. Modi take leadership, he should create free trade zones in each state with high walls to defend them against...the Indian government. Let them be led by young technocrats and returning diaspora, and draw in foreign capital and entrepreneurial Indian intelligentsia.

You cannot move a billion people without agreement on a direction. Carve out space for an Indian Shenzhen, Hong Kong, Dubai, and Estonia. When those stars shine, India will know in which direction to march.

Modi taking leadership...analyse this- It's the Estonians and their culture manifested in their high development. Its the change within the people and their rational thinking led to their development. Lets go with the contentions

1) Estonians are rational thinking people vs rationalism in Indians
2) Estonia separated religion from State vs the hindutava nation ideology which the party he (modi) represents
3)Freedom of press vs banning of "Great Soul: Mahatma Gandhi" book by Gujarat
4)Thrusting the cultural identity (e.g which God to worship) on indigenous people who has their own way of worship vs complete freedom in Estonia
5) Caste-ism vs flat society of estonia
6) Excuses for Administration failure in well known riot vs decisive administration

If atleast all of the above points scored positive for India or Modi, India will be a nation to look upto. With blind faith and culture and casteism and sur name flaunting people exist..these cannot be achieved. Oh, well we know the lobby in the digital media for Modi.

I can say the same for the Government on my island in Mauritius. No direction, no agreement, full corruption... this internet age is the age where even a tiny island like ours (1.3Million... just like Estonia) could have leapt forward.

I never been to Estonia like I also don't really know anyone from the post soviet state, but nevertheless I wish this country and people all the best. I know how hard is to re-built a land after long communism impact.

Just to keep the train of thought in balance. Nothing comes out of nothing. So called communist legacy is not only about outdated living standards and unnecessary military idustrial complex that sank into oblivion when Estonia gained its independence. The country also inherited a good gaulity of technical education that made the IT-boom real. Education is what makes the progress happen, nothing else.